A deal between the leaders of the Czech Republic's governing coalition aimed at solving the country's political crisis has collapsed.

Prime Minister Stanislav Gross's Social Democrats (CSSD) rejected the plan, hours after it was brokered by the heads of the coalition's three parties.

The move would have allowed Mr Gross to quit after a scandal over his financial affairs, without calling new elections.

The CSSD said the deal conceded too much to its former coalition partners.

Mr Gross, Europe's youngest leader at the age of 35, denies any wrongdoing over the financing of a luxury flat.

Carrying on

After eight hours of talks, Mr Gross announced the formation of "a majority pro-European, democratic government" early on Thursday.

Mr Gross had earlier said the Social Democrats would press on as part of a minority government if the other parties did not agree to a new coalition.

However, the CSSD itself vetoed the agreement, objecting to the return to a new cabinet of two Christian Democrat (KDU-CSL) ministers who resigned two weeks ago.

Deputy CSSD vice-chairman Bohuslav Sobotka said his party would continue to govern.

"At this point we have a government that has not lost confidence [in parliament], the government will continue its work and I assume that it would be reconstructed," he was quoted by Reuters news agency as saying.

The BBC's Rob Cameron in Prague says what happens now is anyone's guess.

He says the deal was seen as a last ditch effort to avoid either a minority Social Democrat cabinet, propped up by the communists, or a caretaker government to steer the government to early elections.

For Mr Gross, and the Czech Republic, he says, it is now back to square one.